CHICAGO -- Belfield, N.D., has reached a settlement with the holders of $1.9 million of special assessment bonds the city defaulted on in 1987, ending a threat by the town to become the first North Dakota issuer to file for Chapter 9 municipal bankruptcy protection.

Under the settlement, reached last month, the town has begun to retire the bearer bonds for 55 cents on each dollar of outstanding principal. As part of the agreement, the town will not pay interest on the bonds, according to Al Hardy, the town's attorney.